U.S. Alternative Financial Services Industry: Check Cashing, Pawn Shops, Rent-To-Own Stores, Payday Loans, Money Transfer Services

Table of Contents

Introduction: Study Scope, Sources, Methodology

Executive Overview of Major Findings

• Definition of the components of the U.S. market serving consumers outside of the traditional financial services market (the "unbanked"). Alternative financial services: Check Cashing Stores, Money Transfer Services, Pawn Shops, Payday Loan Services, Rent-to-Own Stores & Services.

• Demographics of the "unbanked" population, key metrics & characteristics

• Definition of each segment, nature of the business/how it works, number of outlets, major growth drivers, dollar mkt. size 2000-2019, 2020 & 2025 forecasts, major competitors.

• Status report & Structure of the Check Cashing Industry
• Status Report & Structure of the Money transfer Industry
• Status Report & Structure of the Pawn Shops Industry
• Status Report & Structure of the Payday Loans Industry
• Status Report& Structure of the Rent-To-Own Industry
• 2020 outlooks for each industry, effects of Covid-19 pandemic on sales & operations
• 2025 forecast for each industry
• Highlights of each report chapter.

Tables:

• Total Size of the U.S. Alternative Financial Services Industry, by 5 Sub-industries (2000-2025 Historical Revenues & Forecast)

Customer Demographics: The Unbanked Population

• Discussion of the unbanked population, Findings of 2016 survey: FDIC National Survey of Unbanked and Underbanked Households"

• percent and no. of unbanked and underbanked U.S. households
• Reasons unbanked households don't have a bank account
• Perceptions of banks' interest
• Percent using alternative financial services
• Banking status for select demographic groups
• Use of pre-paid debit cards, alternative financial services used most often
• Bank and nonbank credit
• Banking status by geography
• Usage of international remittances
• Study conclusions

Tables:

• Percentage of Households That Are Unbanked, By State: 2015

• Households Usage of Specific Alternative Financial Services: 2015, 2011

The U.S. Check Cashing Industry

Summary & Nature of the Business: How Check Cashing Companies Operate

• Industry definition and size. Number of outlets. Check cashers offer convenience for a price. Typical fees charged.

• Other services offered: money orders, wire transfers, electronic bill payments, notary signatures, utility bill payments, tax preparation, gold buying, payday loans.

Industry History and Evolution

• Beginnings in the Great Depression.
• Impact of deregulation of the U.S. banking industry.

Customer Demographics (by gender, income, race, etc.)

• Scarborough Research study.
• Ace Cash Express customer profile.
• FISCA trade group customer profile

Emerging Industry Trends

• Check cashing fees on the rise, Consumer Federation of America survey
• Industry consolidation
• Increased competition
• The 2019 Federal Reserve Payments Study: key findings
• The entry of Walmart into the check cashing market - discussion
• More competition from: Pay By Touch, 7-Eleven, Walmart

Tables:

• Number and Dollar Value of Payments by Check in the U.S. - 2003-2019
• Number/value/avg. value of commercial checks processed: 1989-2019
• Number/value/avg. value of government checks processed: 1989-2019
• Number/value/avg. value of postal money orders processed: 1989-2019

Industry Regulation

• Federal Regulations, state regulations

• Definition of: The Bank Secrecy Act, Money Laundering Suppression Act, USA Patriot Act, Gramm-Leach-Bliley Act

• Table: Check Cashing Fees, by type check

• Table: State Banking Departments for States With Check Cashing Fee Maximums, address & phone.

Industry Size, Growth, Forecasts

• Discussion of avg. annual receipts per store: for Illinois stores, ACE Cash Express, AMSCOT, DFC Global

• Number of outlets declining - discussion, number operating in 2007 vs. today

• Composition of check cashing revenues by type (check cashing, money orders, $ transfers, debit cards, bill payments, gold buying, tax preparation, pawn services, etc. % of total revenues)

• Factors affecting growth
• 2018-2019 industry performance
• 2020 Forecast, effects of the pandemic
• 2025 long-term outlook and forecast
• Federal Reserve findings of non-cash payment trends: checks vs. debit cards

• Table: Industry revenues, annual % change: 2000 through 2019, 2020 & 20125 F.

Check Cashing Industry Structure & Profit Margins

• Review of the composite financial statements for check cashing outlets in New York State and Illinois.

Competitor Profiles (headquarters location, services, 3-5 year financials when available, 2020 1st half results, mergers, history and company profile)

• Ace Cash Express, Inc. (Purpose Financial)
• Check Into Cash
• Dollar Financial Corporation (Money Mart Financial Services)
• AMSCOT Financial

The U.S. Money Transfer Services Industry

Nature of the Business

• The transition from the money order to electronic wire transfers, how electronic transfers work.

• Market drivers: analysis of global migration trends, U.S. population vs. foreign born, illegal immigrants

• Discussion of remittance inflows/outflows, factors affecting, work visas

• Industry trends: increased regulation

• The competition: global & regional providers, banks, informal networks, alternative channels

Regulation of the Industry

• Review of state & federal regulations.

• Definition of: The Bank Secrecy Act, Money Laundering Suppression Act, USA Patriot Act, Gramm-Leach-Bliley Act

Industry Trends

• International money transfer market is very fragmented.

• Major players have a small market share. Number of Western Union & Moneygram agents worldwide, role of Wal-Mart, mobile finance

• New technologies present new competition, discussion of 3 transfer models used, mobile finance

• U.S. banks are developing services for the U.S. - Latin America transmission corridor.

Tables:

• Global migrant stock, by regions: 2005, 2012, 2019
• Origins of the U.S. immigrant population, % born in ea. Nation: 1960-2016
• Top 10 sending countries in the recent years
• Total U.S. Population, Foreign Born Population & Illegal Immigrants: 2001-2017
• U.S. immigration, by country of origin: 2001-2018
• International Migrants: 1970-2019
• Illegal Alien Population, by Country of Birth: 2015 and 2010
• Top Countries Receiving/Sending Remittances: 2010, 2015, 2018
• Global remittance inflows, developed/developing nations: 2001-2020F
• U.S. and Global Remittance Outflows: 2001-2020F
• Destination of outflows from the U.S. - World Bank, other data
• Estimated Remittances from the United States, by Country: 2010-2018
• Number of Western Union and Moneygram Agents Worldwide (2002-2019)
• U.S. Bank money transfer products

Industry Size, Growth, Forecasts

• Industry revenues for 1999 through 2019 - discussion & analysis

• 2019 industry performance: discussion, Marketdata estimates

• 2020 Forecast: effects of the pandemic, Western Union, Moneygram, Euronet outlooks, Marketdata forecast

• 2025 Forecast: discussion & analysis, Marketdata forecast.

Tables:

• Size of U.S. money transfer industry, revenues 1999-2019, 2020 & 2025 forecasts

• Size of U.S. money transfer industry, by company (Western Union, Moneygram, Euronet, U.S. Post Office) 1999-2019

Competitor Profiles (headquarters location, services, company history, recent developments, 3-5 year financials when available, 2020 1st half results).

• Western Union
• Moneygram International
• Euronet Worldwide (Ria Financial Services)

The U.S. Pawn Shops Industry

Nature of the Business

• Description of pawn shop services, number of shops, U.S. and Latin American operations, business model

• Industry status report 2019-2020, industry revenues estimates

• Findings of 2018 National Pawnbrokers Assn. survey: pawn loans vs. merchandise sales, online sales, outlook for 2019

• Industry structure, no. of stores, regional concentration, largest competitors/chains

• Description of pawn loans and their fees, layaway, title loans, tax refund loans, prepaid debit cards, gold buying, check cashing

Industry Trends

• Declining number of pawn shops

• Discussion of anti-payday loan legislation, relation to the pawn shops business

• The gold factor: how pawn shops have benefitted from rising price of gold

Tables:

• No. of U.S. pawn shops: 1990-2020 Forecast
• Historical prices of gold: 1999-2020

Industry Size, Growth, Forecasts

• Availability of data on industry size/revenues, sources

• Avg. annual revenues per pawn shop, by EZ Corp, First Cash - for U.S. vs. Latin American pawn shops

• Historical Industry revenues for 2005-2025 F

• Analysis of current & historical revenues of EZ Corp & First Cash

• Analysis of industry performance during the Great Recession of 2008: findings of NPA trade association and state associations

• 2019 industry performance and Marketdata growth estimate

• 2020 Forecast, effects of the pandemic on operations and revenues, Marketdata growth estimate, 1st half 2020 sales of top competitors.

• 2025 Marketdata Forecast, discussion of growth drivers, major factors

Tables:

• Estimated Industry Revenues, no. of shops, avg. per shop: 20025-2025 F

Competitor Profiles (headquarters location, services, company history, recent developments, 3-5 year financials when available, 2019 results, 2020 1st half results).

• First Cash (Incl. Cash America, prior to acquisition)
• EZCorp.

Table:

• The Major Pawn shop Chains: no. of stores (U.S., Latin America), revenues: 2019

The U.S. Payday Loans Industry

Nature of the Business

• Description of payday loans, how they work, government actions against the industry

• How big banks have supported the industry since 2009, lobbying efforts

• Basic facts and metrics about the industry (avg. loan size, APR, users, etc.)

Industry Trends

• Growth on online installment loans as an alternative to payday loans (emergence of Enova, Elevate, Earnin, other apps and firms)

Industry Size, Growth, Forecasts

• Number of outlets, peak levels, relation to check cashers

• Historical view since 1990s, estimate of no. of outlets by Stephens brokerage firm

• Industry revenues for 1995 through 2025 F - discussion & analysis

• 2016-2018 industry performance findings of Center for Financial Services Innovation study, $ estimates for 2016, 2018

• 2019 industry performance: Marketdata estimate

• 2020 Forecast, effects of the pandemic on operations and revenues, payday loan application grows, digital lending apps soar in usage, Trump administration reverses rule, Marketdata estimate of industry size/growth

• 2025 Forecast: discussion & rationale, Marketdata estimate of industry size/growth

Tables:

• Size of U.S. payday loans industry, revenues 1995-2019, 2020 & 2025 forecasts

Operations

• Profitability of payday lenders, CFPB actions

Legislation, Industry Regulation

• No. of states with anti-payday loan legislation

New Lending Apps

• Discussion of Earnin and Enova products
• User demographics

Competitor Profiles (headquarters location, services, company history, recent developments, 3-5 year financials when available, 2020 1st half results).

Tables:

• Major Payday Loan Companies in 2019 (no. of stores, revenues)
• Major Payday Loan Companies in 2009
• Purpose Financial (Advance America, ACE Cash Express)
• Check 'N Go
• Check Into Cash
• Dollar Financial
• QC Holdings
• Earnin (online, app)
• Curo Group Holdings (online, app)
• Enova Intl. (online, app)

The U.S. Rent-To-Own Industry

Nature of the Business

• Description and evolution of the business, how transactions work, estimate of industry size by APRO trade group

• Avg. store revenues, seasonal sales patterns

Regulation of the Industry

• Review of state & federal regulations, state lease purchase laws
• No. of states with rental purchase statutes
• Typical prices for merchandise vs. outright purchase

Customer Demographics

• Share of population in the "sub-prime" category, findings of Fair Isaac Corp. and APRO studies

Industry Trends

• Increased competition
• Emergence of virtual and kiosk-based operations

Industry Size, Growth, Forecasts

• Opinions of APRO management regarding leaders' market share

• Relation between the industry and recessions, and interest rates - discussion & analysis

• 2019 industry performance: Marketdata estimate, why some estimates of $ size of the industry are not accurate

• 2020 Forecast, effects of the pandemic on operations and revenues, RAC and Aaron's projections of 2020 sales & outlook based on 1st half of year, Marketdata estimate of industry size/growth

• 2025 Forecast: discussion & rationale, trends over next 5 yrs., Marketdata forecast of industry size/growth rate.

Tables:

• Size of U.S. rent-to-own stores industry: 1999-2019, 2020 & 2025 forecasts

• Number of Global Rent-To-Own Stores: 2001-2015

• Comparison of Industry Growth & Federal Funds Interest Rates: 1999-2020

Competitor Profiles (headquarters location, services, company history, recent developments, 3-5 year financials when available, 2020 1st half results).

• Rent A Center
• Aaron's Inc.

Reference Directory of Trade Associations & Sources

• Address, phone, contacts for major trade groups, consultants, list of industry studies and articles, Wall Street analysts/research reports.